Investment services: entry into force of
MiFID a boon for financial markets and investor protection

On 1 November 2007, the Markets in Financial
Services Directive will enter into force. The European Commission looks forward
to the onset of this landmark law, which will play a central role in creating a
robust, common regulatory framework for Europe's securities markets. MiFID will
increase competition among exchanges, multilateral trading facilities (MTFs) and
investment firms, giving them a "single passport" to operate throughout the EU
on the basis of authorisation in their home Member State. Investors will not
only have access to a greater number of trading venues, but also a more robust
and comprehensive framework ensuring high levels of investor protection.
Significant market developments are already underway in anticipation of this
new, more competitive environment.

Internal Market Commissioner Charlie McCreevy said: "MiFID is a
ground-breaking piece of legislation. It will transform the landscape for the
trading of securities and introduce much needed competition and efficiency. The
cost of capital should go down over time, and this will have major benefits for
the European economy. Last but not least, investors gain in terms of greater
choice and stronger protection. I would like to thank the Committee of European
Securities Regulators for their impressive contribution to this outcome. And I
would like to urge those Member States who have not transposed to hurry up
– such lack of action will damage their own firms."

The "passport" will enable authorised investment firms, banks and exchanges
to provide their services freely across borders by harmonising national rules
for investment services and the operation of exchanges. It will benefit
investors, issuers and market participants by promoting efficient and
competitive markets, notably by allowing banks and other investment institutions
to compete fairly with stock exchanges as trading venues in their own right,
something which has until now not been possible in some Member States.

Despite the ambitious timetable in which MiFID has been brought forward, the
vast majority of investment firms operating in the EU will be able to benefit
from its freedoms as of 1 November. For those based or active in the handful of
Member States where transposition of MiFID is still underway, transitional
arrangements have been made by regulators to ensure that business based on the
old Investment Services Directive passport can continue. The body vested with
the monitoring of firms covered by MiFID, the Committee of European Securities
Regulators (CESR), has issued detailed guidance on this issue. For more
information, please see: